Student Loans

Written by Seth Cotterell

It is extremely uncommon for students today to pass through college without receiving some kind of student loan. Debt financing like loans has become the standard procedure in American financial markets. A vast majority of students will have experience taking out and then repaying student loans.

Be Cautious With Student Loans

Initially, student loans seem very attractive. They are a readily available source of money for college and they are easy to get. Interest rates are lower than on other types of loans, and many people simply could not afford to attend college without them. A word of caution is advisable when talking about student loans.

Student loans are loans just like any other and when a student graduates, he or she must then pay the loan amount back. What most students don't seem to understand is that interest plays a huge role in the life of a loan. When a student takes out $20,000 in student loans, he or she will have to repay considerably more than the $20,000 principal. In fact, with interest, the same student who borrowed $20,000 will have to repay almost $30,000 over the next 10 or more years.

If student loans can be managed wisely, they are a viable and valuable source of college financial aid. It is important to know what you are getting yourself into before you agree to a student loan from the government or a private bank or credit union. Late payments carry additional fees and defaulting on your student loans will seriously damage your personal credit, disqualifying you from home loans and other types of financial assistance.